Walmart is a familiar name for most people around the globe. But how many people outside US would have heard about Kroger? It’d be a guess that a fewer people would have heard about it compared to Walmart. In this article, we will see about ‘Does Kroger own Ralphs?’.
About Kroger
Kroger is an American domestic company with a chain of supermarkets. Most Americans would have visited a Kroger or its subsidiary or ordered something online from them, at least once in their lifetime. It is one among the top 5 retail stores in the world, yet has no presence outside of US.
Sounds weird right? In this competitive world where businesses aggressively try to capture people and their attention by branching out, here’s this company content yet strong in their niche.
Wondering how they did this?
While Kroger had a humble beginning with a single grocery store in 1883, they had a growth strategy in mind. They didn’t stop at just expanding to baking business or increasing their store numbers. Over the years, they acquired small and big supermarkets, grocery stores, pharmacies, fuel centers and what not. At the moment around 2800 of their stores operate under 28 different names in 35 states. They kept up with latest technology and put customer satisfaction at first. That’s their success story.
About Ralph
Ralph was founded in 1873 by Ralph brothers. It became a pioneer in grocery business by offering self-service and checkout stands. However, its success was short lived. It had been acquired by many other companies before it finally came under Kroger’s ownership. The only thing consoling about all these acquisitions is that Ralph still has its name, despite even hostile takeovers.
Does Kroger own Ralphs?
Yes, they do. Ralphs is one among the many stores acquired and owned by Kroger. Ralph stands out in being the largest subsidiary owned by Kroger. Ralph was owned by Fred Meyer, who merged with Kroger in 1998. Thus, Kroger became the proud parent of Ralph with this acquisition.
What is Business Acquisition?
In lay man terms, it means purchasing another company. When Kroger acquired Ralph, it became the parent company and Ralph became its subsidiary. This means that Kroger will make all major decisions of Ralph.
Why did Kroger acquire Ralph?
Acquisitions are one of the major strategies used by businesses to expand and increase their profit margins. There’s this synergy which you can gain from acquisition, which makes 1+1 as 3 and not 2. Since both Kroger and Ralph operated in the same supermarket business, Kroger would have benefited from Ralph’s talent and intellectual property.
Ralph was a well-known brand and by acquiring it, Kroger not only overcome the competition, but also accelerated its growth. Ralph was a well-functioning business at the moment of acquisition and thus Kroger was able to merge their operations. This in turn improved their overall efficiency and increased their revenue stream.
Public concerns during Kroger and Ralph merger
Consumer advocates, during those times, fretted that such large mergers will lead to less competition and hence higher prices. But this hasn’t become an issue in real life, since there is still intense competition in the industry. Employees are also concerned regarding safety of their jobs and the culture change during mergers and acquisitions. In addition, Kroger’s stock market price dropped after this merger news. Investors were concerned about Kroger’s increased debt due to the merger. But this investor fear subsided with time and investor confidence was restored.To have a successful merger, companies should learn to effectively deal with such stakeholder concerns.
Kroger and Ralph- a match made in heaven
Just like celebrity weddings, top company mergers also get some limelight. It was widely rumored at the time that Safeway (a major supermarket company in those days) was eyeing on Kroger. This merger helped to keep Safeway at bay and thus maintain Kroger’s independence. Ralph in turn was interested in earning national presence. Hence the merger worked in best interests of both Kroger and Ralph – a match made in heaven.
Details about the deal
Kroger acquired Ralph through its parent company Fred Meyer. Kroger purchased Fred Meyer for $12.8 billion, $8 billion in stock and $4.8 billion in debt. One key secret which helped Ralph in setting up so many successful acquisition is that they let the acquired company maintain their name, image and culture. For example, Fred Meyer was known for its charities and its Founder’s Day sale was something neighborhood people marked on their calendars. Kroger bought Fred Meyer and kept the names of its subsidiaries, thereby keeping the good-will in the communities.
How Kroger stays relevant in the field?
In addition to the acquisitions, Kroger tries it’s best to stay updated with changing trends. Since the e-commerce boom, the traditional brick and mortar stores have seen a plummet in their sales. More and more people are resorting to shopping in the comforts of their homes. Seeing this consumer trend, Kroger had opened an online purchasing platform in 2018. By logging into their app or creating an account online, people can easily shop at Kroger, even earn fuel points and enjoy exclusive savings while shopping online.
Concluding note and whether Kroger can stay in game?
Now we have learnt ‘Does Kroger own Ralphs?’, Kroger owns Ralph and became one of the major retail players, with this acquisition. But are these kinds of acquisitions enough for surviving? In today’s world, profit margin for grocery business is pretty slim, owing to the cut throat competition between major players. The million-dollar question is, ‘Can companies like Kroger who provide services in a niche area compete with giant mass merchandisers like Wal-Mart?’ It is rumored that Kroger acquired Ralph to stay a step ahead of increasing competition from Wal-Mart. This step has increased their visibility and made them the largest retailers in US.
However, Kroger, with its many acquisitions, high debts and its negative operating margins may find it hard to survive in the long run. Though we can console that Kroger’s business experience, economies of scale and operating efficiencies makes it the best competitor against Walmart in US.
So, in short, if you want to take a lesson or two about business, Kroger provides an excellent example. Their strategy can be summarized as follows: build your business, grow your brand, take up companies under your wing and grow together.
